FOXTEL REAPS THE BENEFIT OF NEW PRICING STRATEGY Strong growth in customer numbers supported by record low churn

Media Release: Thursday, August 13, 2015

FOXTEL REAPS THE BENEFIT OF NEW PRICING STRATEGY
Strong growth in customer numbers supported by record low churn

Foxtel today welcomed the release by its shareholders (Telstra Corporation and News Corporation) of full year results, which provide evidence that its new pricing and packaging strategy has reignited subscriber growth.

“Last year we took the bold step of changing our pricing model to attract more customers,” said Foxtel CEO, Richard Freudenstein. “These results demonstrate that was the right call.

“Subscriber numbers grew by 9% or nearly 230,000 driven mainly by take up of our traditional cable and satellite products. Significant growth continued all the way through the financial year.

“At the same time churn declined by 1.6 percentage points to 10.9%, the lowest recorded since at least 2000. This is a reflection on the quality of programming available to Foxtel customers across all genres, combined with the additional value given to existing customers during the period and the range of price points now available. On average customers now remain with Foxtel for nine years, an extraordinary period for a discretionary entertainment product,” Mr Freudenstein said.

“The growth in subscribers resulted in an increase in revenue, although this was partially offset by the impact of a soft advertising market. Subscriber revenues were up 2.4%[1] – lower than subscriber growth, which is to be expected as we launched in November and therefore most of that increase came in the second half of the year.

“Additional activity driven by the new pricing model, plus initiatives such as iQ3, Presto and triple play and investments in new sports such as Formula 1 and V8 Super Cars, saw EBITDA decline in line with our expectations.

“ARPU has held up very well since the price reduction. Broadcasting ARPU was down by only 2% to $93. This decline was anticipated as part of the pricing changes. It is important to note that the vast majority of new customers took up one or more tiers in addition to the $25 Entertainment pack.

“This is a great result in an increasingly competitive space. It makes it clear that consumers understand the real benefits that only Foxtel can offer, “ Mr Freudenstein concluded.